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Non-Tech : The Enron Scandal - Unmoderated -- Ignore unavailable to you. Want to Upgrade?

To: Raymond Duray who wrote (2831)	11/19/2003 9:36:04 PM
From: The Duke of URL©	Read Replies (1) \| Respond to of 3602

Wednesday, November 19, 2003 · Last updated 3:17 p.m. PT FBI created hedge fund in sting THE ASSOCIATED PRESS NEW YORK -- In an elaborate undercover operation to infiltrate an alleged foreign exchange and securities scam, the FBI set up a fake hedge fund called Centurion Consulting Inc., according to court documents unsealed Wednesday. It was through this hedge fund, a loosely regulated investment pool, that the Feds were able to collect the evidence they needed to bust an alleged fraud ring, and arrest 47 people late Tuesday and Wednesday in what has become one of the biggest federal criminal investigations on Wall Street in years. Affidavits filed in the U.S. District Court for the Southern District of New York provide a roadmap to how the investigation, which also included the Commodity Futures Trading Commission and the Securities and Exchange Commission, was able to infiltrate and monitor the alleged scam. The probe began in the spring of 2002 after the FBI learned from a "cooperating witness" of alleged fraudulent activity in the huge foreign exchange market. In May 2002, the FBI created its bogus hedge fund, led by an undercover FBI agent. Shortly thereafter, the "hedge fund" manager was introduced to four of the alleged ringleaders of the scam. Two months later, one of the ringleaders apparently decided the alleged scheme would get a big-time address; through a shell company called Oxford Capital Group LLC he leased space on the 36th floor of 2 World Financial Center, a building that houses such Wall Street titans as Merrill Lynch, ABN Amro and others. Then, a month later, he struck a deal that would mark the beginning the end for the alleged trading scams: he allowed the informant and the FBI hedge fund to occupy office space in his suite at 2 WFC. Regulators charge that another operation at the address was a "boiler room" that employed 20 to 50 brokers who used hard sell, cold-call tactics to get individuals to invest in bogus or nonexistent currency trading strategies. A foreign exchange trading firm was also based there. By November 2002, the FBI began to covertly monitor and record both audio and video in the office, some of which is crucial evidence in the case, according to the affidavit. Court documents describe the informant who helped the government set up its sting operation as an experienced forex broker and trader who also operated his own forex trading firms. He was arrested in 2001 and has since been cooperating with the government after pleading guilty to charges of conspiracy to commit wire fraud and commodities fraud, money laundering and tax evasion.